Detroit's Bankruptcy Breakthrough

A judge rules that public pensions aren't safe from Chapter 9.

Dec. 3, 2013 7:05 p.m. ET

Federal Judge Steven Rhodes removed a major obstacle to Detroit's economic revival on Tuesday by allowing the city to proceed with its bankruptcy filing. And he may have done an even larger public service for cities nationwide by ruling that the pensions of local government employees can be impaired under Chapter 9 of the federal bankruptcy code.

Public unions had sued to block Motown's bankruptcy, claiming that the city hadn't negotiated in good faith with its roughly 100,000 creditors before filing for Chapter 9 in July....